Vol. 3, No. 1 (2011)

Settling Trade Disputes over Natural Resources: Limitations of International Trade Law to Tackle Export Restrictions

Stormy-Annika Mildner, Gitta Lauster

Abstract

In the light of rising competition, scarce natural resources are increasingly perceived as a potential national security risk. Hence, governments are increasingly intervening in primary commodity markets to secure domestic supply at lower prices, for instance, by restricting exports through tariffs and quotas. While limiting exports may be justified in certain cases such as temporary shortages of food supply, they are often a second-best policy tool to address domestic market failures, risking international trade distortions. Some import-dependent countries have therefore lobbied for an update of WTO regulations to curtail the use of export restrictions; others have turned to preferential trade agreements (PTAs) to achieve stricter disciplines. In this paper, the following questions are addressed: What are the current WTO rules regulating export restrictions on natural resources, and what are their limitations? Are PTAs better equipped to prevent trade distortions through export restrictions? To answer these questions, we confine our analysis mostly to Free Trade Agreements (FTAs), not considering the multitude of one-sided preferential agreements.